U.S. Jobs: Not Really a December to Remember
The final month of 2022, employment-wise, is best summarized as "more of the same." That is, unemployment remains in historically low territory (below 4 percent) with a modest bump of 223,000 jobs across numerous sectors. What with numbers for both October (-21,000, to 263,000) and November (-7,000, down to 256,000) revised downward, the December number trails that quarter’s average of about 247,000 jobs.
This indicates a gentle downward trend in job creation across the United States for December. It you take a look at the Washington Post’s bar chart for recent monthly job growth, the period from August through the end of 2022 shows steady, gradual declines in job growth that are somehow managing to stay above the 200,000 level, even as unemployment scarcely budges from the 3.5-3.7 percent range.
Where’s the Job Growth for December?
Growth is spread across numerous sectors as tracked in monthly U.S. Bureau of Labor Statistics reports (the December 2022 report published on Jan. 6, 2023). Noteworthy gains occurred in the following sectors: leisure and hospitality, healthcare, construction, and social assistance.
Modest to minor growth also applies to numerous other sectors, including other services, mining, retail trade, manufacturing, transportation and warehousing, and government employment. On the other hand, professional and business services lost jobs (-6,000) driven by cutbacks in temporary help services.
The biggest gainers fell out as follows:
Leisure and hospitality added 67,000 jobs, of which food services and drinking places accounted for 26,000; amusements, gambling, and recreation came to 25,000; and accommodation hit 10,000. This sector added an average of 79,000 monthly jobs in 2023 versus a 196,000 average for 2021. This is one of the few sectors that remains well shy of pre-pandemic levels, still down by 932,000 jobs (5.5 percent) from February 2022 levels.
Healthcare grew by 55,000 jobs in December, of which ambulatory healthcare contributed 30,000, hospitals added 16,000, and nursing and residential care facilities came to 9,000. Healthcare added a monthly average of 49,000 jobs in 2022, considerably more than the 2021 average of 9,000 jobs. This sector has recovered to (and exceeded) February 2020 levels.
Construction gained 28,000 jobs, of which specialty trade contractors kicked in 17,000 jobs. Monthly job growth in this sector averaged 19,000 for 2022, 3,000 per month higher (about 19 percent) than 2021 levels. The U.S. BLS report characterizes this difference as "little" (I disagree).
Social assistance added 20,000 jobs, about half of which fell into the individual and family services bucket (10,000 jobs). Monthly job growth here averaged 17,000 in 2022 versus 13,000 in 2021 (nearly 31 percent higher).
Medium to minor gainers included:
Other services added 14,000 jobs, equal to the monthly average for 2022, but significantly lower that the 2021 average of 24,000 (-42 percent). This sector also remains negative versus February 2020 employment levels, but only by 174,000 jobs (2.9 percent).
Mining grew by 4,000 jobs, mostly from adding 5,000 jobs for mining support activities (offset by other losses of about 1,000 in other sub-sectors). Since its recent historic low employment point in February 2021, mining has rebounded by 104,000 jobs.
Retail trade added a modest 9,000 jobs in December. This is lower than historical norms for the last month of the holiday shopping season. Also, retail trade averaged 16,000 monthly jobs in 2022, less than half the monthly average of 35,000 in 2021 (-54 percent).
Manufacturing gained about 8,000 jobs, with a 24,000 gain for durable goods undercut by a 16,000 loss in nondurable goods. The 2022 monthly average here was 32,000 jobs vis-à-vis a 30,000 monthly average for 2021.
Transportation and warehousing inched up by 5,000 jobs, of which air transportation (3,000) made up most of that gain. Offsets came from couriers and messengers (-4,000) and warehousing and storage (-3,000). Average monthly growth in 2022 in this sector was 17,000: That’s just under half the 2021 average of 36,000.
Government added 3,000 jobs in December overall, but the most noteworthy change is a loss of 24,000 jobs in state government education (mostly related to strikes among university workers in the University of California system).
The only "big loser" for December was professional and business services, down by 6,000 jobs that month. That said, the 2022 monthly average here was 50,000, about 60 percentof the monthly 2021 average of 94,000 jobs. Other sectors, namely wholesale trade, our home sector of information, and financial activities, were mostly flat in December.
Wage Action Described and Disclosed
Average hourly earnings added $0.09 for December, up to US $32.82, with wages up by 4.6 percent in 2022. That’s still well below prevailing inflation rates, last reported for December 2022 at 6.5 percent. This has dipped from the 8-to-9 percent range that prevailed earlier this year but still shows that inflation exceeds wage growth by a pretty major margin.
Most labor economists expect upward pressure on wages to continue throughout 2023, as the Fed does what it can to bring inflation rates down even further.
A Cooling Labor Market, but Still Many Jobs Remain Unfilled
While job growth is indeed slowing down (but only gradually), lots of businesses still have trouble hiring people to fill out their full rosters. This means that despite widely publicized layoffs in tech jobs, and in advertising media (especially social media), finance, and professional services, other smaller businesses are scrambling to hire the people they need to work in customer contact, support, and production jobs.
Thus, the labor market remains strong enough to make things challenging for many businesses, even as workers agitate (or change employers) to boost their takehome pay. It’s an interesting situation that’s likely to persist for most or all of 2023. Stay tuned, and I’ll keep you posted as things develop further. Happy 2023!
Note: I blush to confess that I was out of town on vacation for the week of January 6-12, so this submission is coming in a bit later than usual. Thanks to GoCertify readers for their patience and understanding.